an NPV analysis of costs vs. projected detailed revenue streams over a five year period with cash inflows and outflows over the project life.

an NPV analysis of costs vs. projected detailed revenue streams over a five year period with cash inflows and outflows over the project life.

Assume you are the
project manager for a new business venture. This venture will require
financing, but once completed, will generate revenue and, eventually, a profit
over cost. For CP-1, you are to write a Project Proposal with enough detail to
convince investors to finance your idea. This Project Proposal will require
detailed cost and revenue estimates and a credible schedule to win investor
support.

Select a venture of
personal interest. Read the Proposal Requirements below to help you select a
suitable idea. For example, select a venture where you can identify realistic
cost and scheduling concerns. Opening a small retail storefront or a franchise
is one example. Do NOT propose building a house, because investors typically
already have financing before beginning such a project. When selecting your
project, keep in mind the goal of CP-1 is to apply the techniques introduced
during the course.

Focus on detailed cost
estimating, scheduling, and project justification. Estimating includes specific
assumptions made during the estimating process, as well as quantities, unit
prices, hourly rates for tasks, and accumulated totals. Justification will
include an NPV analysis of costs vs. projected detailed revenue streams over a
five year period with cash inflows and outflows over the project life. Start-up
and other costs, and revenue streams, should be derived from detailed project
cost estimates and sales forecasts.

When you establish your
financial data you must be reasonable. A product that is developed for a cost
of $100,000 will rarely have a net income of $1,000,000 per year, but I have
seen students dream that up in the past. The numbers should allow for the
possibility of failure if things go wrong.


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